Lift ban on oil drilling off Florida

H. GERALD STARNESSt. Augustine

Published Sunday, June 01, 2008

Oil companies do not set the cost of a barrel of crude or a gallon of gasoline. Prices are a function of the open market futures contracts traded on the New York Mercantile Exchange and other exchanges around the world. It is like the stock market; investors are betting and speculating on whether the price will rise or fall. They never accept the oil. Major oil companies own less than 5 percent of U.S. gas stations. Local stations set their prices on their costs and competition's prices. Crude costs are about 70 percent of a gallon of gasoline. The other costs are complex factors of refining, transporting, taxes and marketing.

The offshore areas of Florida are closed to exploration and drilling under decades-old congressional moratoriums and presidential executive orders. The entire Florida East and West coasts are off-limits for new drilling. Our U.S. Sens. Bill Nelson and Mel Martinez and state and local officials strongly oppose any drilling in the deep offshore waters of our coasts on the Atlantic and Gulf, where billions of barrels of untouched reserves are believed to exist.

Rep. John Mica and a few other Congressmen appear to be aware that the tourist numbers are down significantly due to the RV and other vehicular fuel costs of travel to Florida's beaches. Perhaps the state and counties' revenues from off- shore drilling and fees from crude oil production could be more dependable than that from tourism.

If gasoline prices go to $5 a gallon, there will not be any tourists to visit our revered beaches. The economies of states that produce oil and gas, such as Alaska and Wyoming, are better off than all the others and can put funds to work on their infrastructure, bringing their unemployment rate down to 3 percent.

National governments all over the planet are hogging 70 percent of the world's most accessible petroleum. Oil prices fluctuate with OPEC production decisions that supply 40 percent of the world's crude, or when conflict in the Middle East or Nigeria or other situations threatens supplies. The problem basically comes down to supply and demand growth from economic advances and population increases in many countries.

In Washington, Republican lawmakers and oil industry lobbyists are arguing that opening the restricted areas would boost supplies and bring down oil prices. Democratic congressional leaders argue that it gives a false impression that more drilling will lead to lower gasoline prices. Critics contend that not enough is being done to encourage alternative fuels.

Little data exist about how much oil and gas might be found under our Florida waters. Federal agencies are prevented from doing even rudimentary geological surveys.

The Congress and the president should provide incentives for alternative sources of energy, efficiencies and conservation measures. But they won't, and that will be costly.

More clean nuclear power is scheduled for our Florida power plants. To support the needs of a growing economy and standard of living in Florida and the nation, Congress and the administration must have the political courage to pass legislation that lifts the bans on exploration and drilling for oil despite the opposition from the spill-terrified environmentalists.

Drilling off our shores will be expensive and unlikely to bring down the price of fuel, but prices will stabilize. In economic terms, there is a great difference in the crude, refining and transportation costs being paid to our American companies and their employees as opposed to their going to Middle East potentates.

Why can't these idiotic restrictions on domestic drilling be removed before we find ourselves in another deep recession or lengthy stagnation with no way out?

H. Gerald Starnes has a bachelor's of science and master's of business administration, and he had nearly a 40-year career in the energy industry as an engineer and manager with Citgo and General Electric.